SUMMARY: Customer referrals are a powerful way to pull in more sales and leads. Some companies offer rewards, but you can push results even higher with a few simple tactics.

See how this consumer electronics company sent an automated email to encourage new customers to refer their friends and contacts. This email generated 75 percent of all registrations in the referral program.

Marketers at Roku, a video-streaming device for television, knew that word-of-mouth helped push sales. About 25 percent of their customers said they had first heard of the company from a friend or family member.

"Our goal was to try to increase that because word-of-mouth and referrals are one of the most cost-effective ways of acquiring customers," says Lomit Patel, Senior Director, Direct Marketing, Roku. "Even if they don't translate directly into sales, it helps create a positive image and a positive awareness of Roku."

In response, Patel's team launched a great referral program. It offered rewards to customers who sent referrals via email, Facebook or Twitter. But the team needed to get more customers to participate.

CAMPAIGN

Patel planned to send triggered emails to Roku's newest customers to ask if they'd like to tell their friends about the product. Email would be central to the program's promotion.

Here are the steps his team followed:

Step #1. Establish a program and relevant rewards

Customers could visit Roku's referral landing page to suggest the product to friends via email, Facebook, Twitter or another channel. The page generated a customizable default message and referral link. Each link included a tracking code which tallied sales made through each customer's referral.

Roku tested several different rewards to offer. Once Patel's team realized that more than 80 percent of Roku's customers were also Netflix customers, they settled on free one-month Netflix memberships.

- No limit on rewards

Customers received coupons for a free month of Netflix for every sale made through their referral links. There was no limit on the number and rewards were not based on the number of referrals sent.

"The program really started to go forward after we changed the reward structure," Patel says.

Step #2. Design referral landing page

The referral landing page had two goals: 1. Get customers to register in the referral program2. Get customers to send referrals

After arriving, visitors were shown an overlay that requested their first name, last name and email address. Once information was submitted, the overlay disappeared to reveal the referral page (see creative samples below).

The referral page emphasized the Netflix offer as well as:

- Email form

Visitors could type contacts' email addresses or import them from a Hotmail, Yahoo!, Gmail or another email account. Recommended text for the email was included and could be removed or altered. The text:

After visitors clicked "send," the system generated emails for all listed contacts and included the referral link.

- Other sharing buttons

Visitors could use the page to share similar messages on Facebook, Twitter and Blogger. A unique referral URL was also offered, which visitors could copy and paste anywhere they preferred.

Step #3. Design email for new customers

Roku needed a systematic way to encourage new customers to send referrals. The team designed a triggered email to automatically reach out after a purchase (see creative samples below). The email included:o Image of a TV with Netflix on ito Large text: "Get a free month of Netflix for each friend who tries Roku"o Description of three steps to getting rewardso Button to visit referral landing page

- Test the timing

Roku has a 30-day money-back guarantee and Patel's team wanted to avoid asking for referrals during that period. Likewise, he did not want to wait too long to send the email, since customers would likely discover the program through Roku's other channels.

The team tested sending the email after three different periods: 35 days, 40 days and 45 days after purchase (results are below).

Step #4. Promote in additional channels

In addition to the automated email to new customers, Roku promoted the referral program in the following areas:

- Launch emails

The automated emails described above would not reach Roku's older customers. But older customers still needed to be kept in the loop.

The team twice promoted the referral program in dedicated emails to its house list. It sent the first email at the program's launch, and the second about three months later. These emails were similar to the program's automated messages.

After these tests, the team tested a change to the referral landing page. Instead of using an overlay to request visitors' names and email addresses, visitors arriving from these emails had their information pre-loaded into the form.

This increased conversion rates for these emails to 55 percent, Patel says.

- Emailed referrals beat social referrals

Of all the channels through which customers could send referrals to contacts, referrals sent via email drove 70 percent of all sales in the program, Patel says.

"Our customer demographics tend to be in the 30s to 50s range, and that could indicate why they are more comfortable using email versus using social media."

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